Bid-rigging contractor discovers law federal agencies choose to enforce

By Don Marsh

In an age of opponent cancellation and selective federal, state or local law enforcement, a U.S. Department of Justice (DOJ) plea agreement with an employee of a contractor performing concrete work for Minnesota municipalities offers two takeaways. First, despite Herculean efforts, the current White House has some unfinished business in its quest to erase all things Donald Trump. Second, there is little value in comparing the probability of prosecution for Minnesota construction contracting shenanigans versus the May 2020 arson and rioting in Minneapolis.

The plea agreement was entered late last month in the U.S. District Court for the District of Minnesota, St. Paul. It describes a conspiracy where the defendant, representing Company A, conferred with the chief executive officer (Individual B) of a peer (Company B) to rig concrete repair or construction project bids for contracts with the cities of Eden Prairie and Plymouth, Eden Prairie Schools, and Wayzata Public Schools. Minnesota law requires municipalities and school districts to obtain quotes from two or more bidders when property construction, repair or maintenance contracts reach a certain threshold.

The DOJ Antitrust Division contends that a Company A and Company B conspiracy ran from at least September 2012 through July 2017; defendant and co-conspirators communicated with each other about concrete contracts with the two cities and school districts; Individual B provided prices for the defendant to submit in Company A quotations, their bottom lines exceeding Company B bids. The Minnesota scheme is one of “complementary” or “cover” bidding. The Antitrust Division cites it as the most frequently occurring form of bid rigging and an action that “defraud[s] purchasers by creating the appearance of competition to conceal secretly inflated prices.”

By pleading guilty to conspiracy to restrain trade, a Sherman Act Section One violation, the defendant faces maximum penalties of 10 years in jail and a $1 million fine. “The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine,” the plea agreement states.

“This resolution demonstrates the Antitrust Division’s commitment to ensuring the integrity of government procurement,” says DOJ Acting Assistant Attorney General Richard Powers. “Bid-rigging schemes that target local government contracts harm taxpayers, and people who take part in these conspiracies will be held accountable for their actions.”

The Justice announcement suggests the investigation leading to the plea agreement stemmed from the work of the Procurement Collusion Strike Force (PCSF), organized in 2019 to lead “a coordinated national response to combat antitrust crimes and related schemes in government procurement, grant, and program funding at all levels—federal, state, and local.” Participants aim to conduct outreach and training for procurement officials and government contractors on antitrust risks in their day to day duties. Along with the Antitrust Division, the PCSF includes the Federal Bureau of Investigation plus multiple U.S. Attorneys’ Offices and federal agency Inspectors General. To sustain a mission of keeping public construction bidders honest, the PCSF might need to avoid talk of its origins and stay under the radar of a White House hell bent on reversing the sound policies of Donald Trump and his cabinet officials.

Don Marsh
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